Sorry, jaytux, missed your function call in the first reading.
The password() is used to encrypt passwords in the MySql user grant table. Here's the reference:
PASSWORD(str)
Calculates a password string from the plaintext password str. This is the function that is used for encrypting MySQL passwords for storage in the Password column of the user grant table:
mysql> select PASSWORD('badpwd');
-> '7f84554057dd964b'
PASSWORD() encryption is non-reversible. PASSWORD() does not perform password encryption in the same way that Unix passwords are encrypted. You should not assume that if your Unix password and your MySQL password are the same, PASSWORD() will result in the same encrypted value as is stored in the Unix password file. See ENCRYPT().
If you are simply creating a table in your own database for your users, then don't use the PASSWORD() function.